This Week's Signals
January 20, 2024
Aging of the Population - “As the International Monetary Fund (IMF) puts it, “the most formidable demographic challenge facing the world is no longer rapid population growth, but population aging.” Read more here
Artificial Intelligence - “Companies big and small showed off new AI-powered products and their AI-inspired visions for the future at the world’s biggest tech convention this week in Las Vegas. There were pillows that can reduce snoring, mirrors that can detect your mood and innovations from pet-like companions to cars that integrate with viral chatbot ChatGPT. But this year’s announcements hit differently from previous buzzy developments, such as the Metaverse or adding voice assistant technology to appliances. That’s because nearly every company appeared to be on the same page in 2024.” Read more here
Artificial Intelligence - “Taiwanese chipmaker TSMC projected on Thursday more than 20% growth in 2024 revenue on booming demand for high-end chips used in artificial intelligence (AI) applications even as the broader industry deals with weak smartphone and electric vehicle sales.” Read more here
Cloud Computing - “Cloud continues to be the foundational transformation platform for organizations that want to be industry leaders and adopt the most impactful emerging technologies. From GenAI and automated shop floors to software-defined vehicles and smart meters, the technology innovations promising to revolutionize industries require strong cloud capabilities and an understanding of how the cloud is evolving.” Read more here
Data Privacy & Digital Identity - “In the payments and financial landscape, staying still often means falling behind. And falling behind in today’s rapidly digitizing environment can be dangerous. That’s because traditional security systems are proving to be increasingly vulnerable to attacks from 21st century cyber fraudsters using sophisticated tactics and tools that have been democratized by the rise of novel technologies like generative artificial intelligence (AI). As fraudsters grow more emboldened and scale their attacks using new tools, eCommerce sites and financial institutions trying to meet a digitally native cohort of end users must assess the ways in which they can stay ahead with their own fraud defenses. The proliferation of online banking in particular has provided scammers with fresh opportunities…” Read more here
Digital Infrastructure & Connectivity
“The internet works because of this expansive physical footprint containing underwater fiber optic pipelines, giant routing facilities and last-mile local connections working in harmony. To transport the massive amounts of data generated by a growing internet population and rising demand for highly advanced technologies like AI and IoT, institutions require more fiber networks and capacity. Behind the scenes, digital infrastructure providers are continuously working to build and advance these networks for uninterrupted holiday streaming, surfing, smart home connectivity, and more.” Read more here
Shares of Super Micro Computer (SMCI) jumped in aftermarket trading last night after the company bumped up its quarterly sales and profit guidance. The company now expects net sales of $3.60-$3.65 billion versus an earlier forecast of $2.7 to $2.9 billion. Super Micro makes products such as rackmount servers and graphics processing unit (GPU) servers, motherboards and chassis, and ethernet switches and adapters.
“Meta is spending billions of dollars on Nvidia’s popular computer chips, which are at the heart of artificial intelligence research and projects… In an Instagram Reels post on Thursday, Zuckerberg said the company’s “future roadmap” for AI requires it to build a “massive compute infrastructure.” By the end of 2024, Zuckerberg said that infrastructure will include 350,000 H100 graphics cards from Nvidia. Read more here
EV Transition - “America’s ability to charge future electric vehicles got a jolt Thursday as the Biden administration announced recipients of $623 million in infrastructure funds, with a focus on disadvantaged communities and freight trucks. The announced grants, split between 22 states and the territory of Puerto Rico, aim to fill numerous and wide gaps in the national EV charging network. Read more here
Guilty Pleasure - “Coffee and tea shipments are being rerouted to avoid the Red Sea following repeated drone and missile attacks. Ongoing US-UK airstrikes failed to halt Yemen-based Houthi rebels who this week hit a Greek-registered bulk carrier, a Malta-based cargo ship, and an American-owned cargo ship in the Gulf of Aden… According to Reuters, coffee deliveries to Europe from Vietnam and Indonesia have been delayed up to three weeks, and container freight rates have increased by 150% on Asian-European routes.” Read more here
Luxury Buying Boom - “Burberry posted lower than expected sales growth in China in its final quarter of the year and blamed a worsening slowdown in demand for luxury goods when it issued a profit warning last week. But for Richemont, one of the world's biggest luxury groups after France's LVMH, China's improvement helped push it towards its highest ever quarterly sales in the three months to the end of December… Richemont said its sales in China, including Macau and Hong Kong, were 25% higher, with Chinese tourists preferring to travel in the region rather than heading further afield.” Read more here
Market Hedge - “The Conference Board released a survey of more than 1,200 executives on Wednesday and it listed a recession as their top concern. It showed that 37% of US chief executives are prepared for a recession in the year ahead. The economy is certainly contending with some headwinds: Americans are racking up debt as they continue to draw down their pandemic savings while banks are toughening their lending standards.” Read more here
Precision Ag & Agri Science - “Today, a combination of bespoke cameras, cutting-edge cloud computing, artificial intelligence, robotics, and state-of-the-art engineering is putting farms on the verge of a digital revolution. In coming years, farmers may be managing millions of plants individually using autonomously controlled, data-gathering machinery.” Read more here
Safety & Security - “Much of Europe’s industrial capacity to make weapons has eroded over years of budget cuts, and turning that around is a challenge at a time when most governments face budget constraints amid slow economic growth and aging populations, as well as large political opposition to cutting back on welfare spending to fund defense. Europe has “systematically demilitarized itself because it didn’t need to spend the money,” thanks to the lack of an apparent threat and U.S. military dominance around the globe, said Anthony King, a professor of war studies at the University of Warwick. “They have basically gone to sleep.” Read more here
The strategies behind our Thematic Models:
Aging of the Population - Capturing the demographic wave of the aging population and the changing demands it brings with it.
Artificial Intelligence – Software, chips, and related companies that facilitate the collection and analysis of large data sets and autonomous generation of solutions given non-machine language prompts.
CHIPs Act – Capturing the reshoring of the US semiconductor industry and the $52.7 billion poised to be spent on semiconductor manufacturing.
Cloud Computing – Companies that provide hardware and services that enhance the cloud computing experience for users, such as co-location, security, and edge computing.
Consumer Inflation Fighters - Companies poised to benefit as consumers stretch the disposable spending dollars they do have.
Core Holdings – Companies that reflect economic activity and are large enough to not get pushed around by day-to-day market trends. Low-beta, large-cap names able to better withstand economic turmoil.
Digital Infrastructure & Connectivity -The buildout and upgrading of our Networks, Data Storage Facilities, and Equipment.
Data Privacy & Digital Identity - Companies providing the tools and services that verify authorized users and safeguard personal data privacy.
EV Transition - Capturing the transition to EVs and related infrastructure from combustion engine vehicles.
Guilty Pleasure – Companies that produce/provide food and drink products that consumers tend to enjoy regardless of the economic environment and potential long-term health hazards associated with excessive consumption.
Homebuilding & Materials – Ranging from homebuilders to key building product companies that serve the housing market, this model looks to capture the rising demand for housing, one that should benefit as the Fed returns monetary policy to more normalized levels.
Luxury Buying Boom - Tapping into aspirational buying and affluent buyers amid rising global wealth.Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Market Hedge Model – This basket of daily reset swap-based broad market inverse ETFs protects in the face of market pullbacks, overbought market technicals, and other drivers of market volatility.
Nuclear Energy & Uranium – Companies that either build and maintain nuclear power plants or are involved in the production of uranium.
Precision Ag & Agri Science – Companies that look to address shrinking arable land by helping maximize crop yields utilizing technology, science, or both.
Rebuilding America - Turning the focused spending on rebuilding US infrastructure into revenue and profits.
Safety & Security – Targeted exposure to companies that provide goods and services primarily to the Defense and security sectors of the economy.
Space Economy – Companies that focus on the launch and operation of satellite networks.
The strategies behind our Dividend Income Models:
Monthly Dividend Model – Pretty much what the name says – this model invests in companies that pay monthly dividends to shareholders.
ETF Dividend Model – High-yielding ETFs that provide a range of exposures from domestic equities, international equities, emerging market equities, MLPS, and REITs.
ETF Enhanced Dividend Model – A group of high-yielding ETFs that utilize options to enhance yield through collecting option income.